Correlation Between WT OFFSHORE and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both WT OFFSHORE and Lifeway Foods at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining WT OFFSHORE and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT OFFSHORE and Lifeway Foods, you can compare the effects of market volatilities on WT OFFSHORE and Lifeway Foods and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in WT OFFSHORE with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT OFFSHORE and Lifeway Foods.
Diversification Opportunities for WT OFFSHORE and Lifeway Foods
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UWV and Lifeway is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding WT OFFSHORE and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and WT OFFSHORE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on WT OFFSHORE are associated (or correlated) with Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of WT OFFSHORE i.e., WT OFFSHORE and Lifeway Foods go up and down completely randomly.
Pair Corralation between WT OFFSHORE and Lifeway Foods
Assuming the 90 days trading horizon WT OFFSHORE is expected to under-perform the Lifeway Foods. But the stock apears to be less risky and, when comparing its historical volatility, WT OFFSHORE is 1.53 times less risky than Lifeway Foods. The stock trades about -0.08 of its potential returns per unit of risk. The Lifeway Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Lifeway Foods on September 3, 2024 and sell it today you would earn a total of 140.00 from holding Lifeway Foods or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WT OFFSHORE vs. Lifeway Foods
Performance |
| Timeline |
| WT OFFSHORE |
| Lifeway Foods |
WT OFFSHORE and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT OFFSHORE and Lifeway Foods
The main advantage of trading using opposite WT OFFSHORE and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT OFFSHORE position performs unexpectedly, Lifeway Foods can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| WT OFFSHORE vs. TOTAL GABON | WT OFFSHORE vs. Walgreens Boots Alliance | WT OFFSHORE vs. Peak Resources Limited |
| Lifeway Foods vs. Nestl SA | Lifeway Foods vs. Kraft Heinz Co | Lifeway Foods vs. General Mills | Lifeway Foods vs. Kellogg Company |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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